ECJ: Postal address on invoice for VAT purposes is sufficient

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The European Court of Justice’s decision on the possibility of using postal addresses on invoices confirms how the EU VAT Directive should be interpreted. However, the ruling is not restricted to suppliers.

In its decision of November 15 2017 in the legal cases
Geissel and Butin (C-374/16 and C-375/16),
the ECJ held that the address, where the issuer of an invoice
carries out its economic activity, does not have to be
specified in the invoice for the purpose of input VAT
deduction.

In the ECJ’s view, it is sufficient that the
postal address used in the invoices is an address at which the
supplier is contactable. This is a clear rejection by the ECJ
of the rather narrow German point of view. The decision is also
important as regards the recipient’s address.

On April 6 2016, the two VAT
Senates of the Federal Fiscal Court referred two cases to the
ECJ for a preliminary ruling (V R 25/15 and XI R 20/14). Both
Senates wanted to know whether the necessary postal
information, which must be stated on an invoice, i.e. the full
address (in accordance with section 14, paragraph 4,
No. 1 of the German VAT Act and Article 226 No. 5 of
the VAT Directive) requires the invoice address to correspond
with the address where the issuer of the invoice carries out
its economic activity. While the Fifth Senate considered the
address of an economic activity to be necessary, the Eleventh
Senate considered a postal address to be sufficient.

Facts

The plaintiffs in both proceedings
operate in the automobile trade industry.

Both claimed input VAT deductions
from incoming invoices in which the suppliers merely stated
their respective postal addresses. The tax office denied input
VAT deduction on the grounds that the necessary information,
i.e. the full address, was missing from the invoices. The
address, where the issuer of an invoice carries out its
economic activity was considered by the tax office to be
decisive.

The two competent tax courts held
different views. Thus, the Federal Fiscal Court referred, to
the ECJ, the question as to whether an "address" means the
address where the issuer of the invoice carries out its
economic activity.

Reasons for the ECJ’s decision

In the ECJ’s view, the
concept of "address" does not require that the issuer of the
invoice carry out any economic activities there. The postal
address, where the issuer of the invoice can be reached by
mail, is sufficient as an indication of address.

Based on its interpretation of the
wording, the ECJ clarified, that the concept of "address"
covers any kind of address, including a postal address. It is
not possible for member states to lay down more stringent
requirements than those in the VAT Directive. With reference to
the Senatex decision (C-518/14), the ECJ held that an
invoice was merely a formal condition of the right to deduct
VAT, rather than a material condition. It follows that the
detailed rules regarding the indication of an address cannot be
a decisive condition for the purposes of the deduction of
VAT.

Taking into consideration the
purpose of Article 226, No. 5 of the VAT Directive,
the ECJ held that the aim of the requirement of an address for
the issuer of an invoice was to identify the said issuer of
that invoice. Thus enabling the tax authorities to carry out
the necessary checks to determine whether the deducted VAT
amount was reported in the supplier’s VAT return
and whether it was ultimately paid. The essential piece of
information was the supplier’s VAT ID number. This
number is easily verifiable by the tax authorities and is
obtained only in the course of a strict registration procedure.
In contrast, the importance of a postal address is of secondary
importance.

Consequences

The ECJ decision is practical and
also convincing in terms of content. The ECJ upholds its view,
which it clearly expressed in the decisions of Senatex
(C-518/14) and Barlis 06 (C-516/14): Turning away
from formal conditions and strengthening substantive law.

It is a widespread practice that
companies use PO Box addresses, etc. as invoice addresses.
Based on the ECJ decision, companies may continue this
practice.

Further, the increasing importance
of digitalisation is leading to the dematerialisation of a
great number of business administrative activities. Determining
the precise place of economic activity may no longer be
terribly easy in many cases and will not be necessary for the
purposes of invoicing in the future.

The ECJ decided on the supplier’s address. The
same reasoning will undoubtedly also apply to the address of
the issuer of the invoice and the recipient’s
address. There is no apparent reason why these addresses should
be treated differently. The tax authority has previously held
that purely indicating a post box address is sufficient (see
section 14.5, paragraph 2, sentence 3 of the
German VAT Circular). Now, national case law will have to give
way to this view.

This article was written by Thomas Streit, partner and
lawyer at KÜFFNER MAUNZ LANGER ZUGMAIER in
Germany.